Going underground??, page-25

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foyt

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07/01/19

10:42

Post #: 37042535
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Originally posted by VYR: ↑

How much cash is emerging is a difficult question because several significant changes have occurred since the only valuation we have access too was done.

Late 2017 the valuation was forecasting
Surplus cash at the end of 2018 of $46m after repaying $40m of creditors and debt. and surplus cash of $50m in 2019.

We know that we are forecast to produce circa 4kt of copper less than the valuation forecast in 2018 so a drop in forecast revenues of $34m. I think this is just a timing issue and their will come bach in 2019 or 2020..

Two other things have happened on the negative side.

Mining is continuing until mid 2019 and we would have exhausted the budgeted expenditure in Sept 18. So nine months of mining expenditure down the drain. With two machines operating we were spending $7m a month. How much is the over-run costing? Maybe 9 x $3.5m.? $30m ???

Secondly due to delays in processing the processing plant is now forecast to continue operating into the third quarter of 2019. That's costing around $7m a quarter.
On the positive side we have seen a significant jump in copper price.

The big question is how much will the negatives out weigh the positives or vice-versa.

If I'm right in thinking the overruns are in the order of $37m we will need to recover an average of $9000 a tonne for the whole 47 K/t of copper that are forecast to be produced.

This year we look like achieving about $8869 for about 23k/t

I'm forecasting cash surplus at the end of 2018 to be in the order of $46m - $34m of sales- 3x$3.5m of mining cost + 23k/t x $650 sales. equals

$14.5 m or 2.5 cents / share.

All we have been told is that the cash surplus will be healthy I won't be surprised if there are other cost blowouts and a healthy cash surplus proves to be a bit less..

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Hi VYR,

Thanks for your posts. Just a little correction - "Secondly due to delays in processing the processing plant is now forecast to continue operating into the third quarter of 2019"
I think you meant processing is forecast to continue until the third quarter of 2020.
Would be a very gloomy outlook if only later this year !

cheers, Foyt

HGO Price at posting: 8.5¢ Sentiment: Hold Disclosure: Held
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Going underground??, page-25

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